in the article titled “What is financial planning?”We understand that financial planning is one way to achieve your goals in life. by making financial arrangements in advance in financial planning We don’t just teach. Just save and get richbut also asked to choose their needs and desires according to their level of importance.
There are various concepts in the development of this priority scale. It starts with gathering needs based on primary, secondary and tertiary education to preparing financial planning based on the financial pyramid concept. What is a financial pyramid? and how do you use it Check out the following comments:
Understanding the Financial Pyramid
The financial pyramid is a mockup. financial planning into the pyramid This pyramid can be divided into at least 3 levels: wealth stability. accumulation and convenience of wealth and distribution of wealth
In this case, the security aspect of wealth is essential to existence (need to survive) compared to the accumulation and convenience of wealth and the distribution of wealth This means that the last two levels can be cut if there is an urgent situation. While the first level must be maintained as much as possible.
financial pyramid level
1. Property security
The first level of the financial pyramid is the stability of wealth. In the pyramid this level is located at the bottom. is the largest and become the foundation that supports other levels
At this level, you need to combine various requirements. that are important to meet the daily needs and prevent the unexpected. (risk management) The person is said to have a good financial pyramid. If this fundamental aspect is accomplished Included at this level are financial budgets for:
- daily needs
- Paying off debts and bills of credit
- Emergency Fund.
- Low-risk investments such as money market funds and fixed deposits.
In that case, the budget can be cut for points 3 and 4, or if there are urgent matters related to the need for clothing, food and board, as well as credit card payments. That way, even if you no longer have an emergency fund or insurance. But your daily needs can still be met.
2. Accumulation and Convenience of Wealth
Included in this level are budgets for:
- Investments, especially investments with medium to high risk, such as bonds and stocks
- lifestyle, such as eating at a restaurant or taking a walk
- Savings for old age (pension fund)
These budgets are in the second level because the goal is to earn profits. whether it is a financial benefit (pension funds and financial investments) as well as spiritual benefits (lifestyle needs) prior to the above first-level budget cuts. The budget for this second level has to be cut first to stay financially sound.
3. Wealth Distribution
the distribution of wealth (distribution of wealth) is the financial state in which you are ready to share your assets with others. Either in the form of inheritance or in the form of grants (zakat, infaq, alms and wakfa).
Many sources state that Indonesia is one of the most hardworking countries in the world. This is only natural considering that Islam is the religion that the majority of people in this country encourages sharing.
However, you must remember the rules of sharing in Islam. Except for Zakat Fitrah is the Sunnah. (should do it better But if you can’t, it’s okay) which means It doesn’t matter if your funds for ISWAF will be written off or temporarily lost if your finances are in crisis.
Advantages of using a financial pyramid
1. The priority will be clearer.
For some, the order of primary, secondary, and tertiary needs is abstract and often mixed. With the more detailed financial pyramids mentioned above. You’ll know better about what really needs to be prioritized. and the desires will be paused
2. The financial pyramid is the success of financial planning.
Often times, the levels in the financial pyramid are not just levels of importance. but also the level of financial success. This means that people using the scheme will not invest until they have enough insurance and emergency funds. or will not give charity without investment Thus, individuals are able to set their financial goals more clearly and realistically and better measure their level of financial success.
How to organize financial planning according to the financial pyramid
1. Post an expense thread above.
In the above discussion You must complete at least 9 expense entries, 5 for the first level of the financial planning pyramid, 3 for the second, and 1 for the third. You can create them at the same time. (9 spending items at once) or gradually (5 items will be filled first and then later)
2. The portion of the first floor is larger.
as shown in the pyramid The first level should have a larger portion of the budget than the second and third levels. Because this first level is directly related to your daily life. whether it be clothing, food and housing or to meet emergency needs (emergency fund and insurance)
The emergency fund is Budget that is allocated for emergencies such as sudden hospitalization of medicines. The allocation of this emergency fund varies depending on whether you are married or not. when you are married Of course, you need to prepare an emergency fund with more currency. Because you have to take care of your spouse and children.
3. The second layer is larger than the third layer.
This is important because:
- Typically, the capital gains are used to meet future needs such as houses, children’s schools, etc.
- About your needs when you retire later, at age 60 or 65 (depending on the job), people generally stop working in formal jobs, such as being an employee or entrepreneur. In addition to having to meet their own needs. It’s also possible that your level of health will decline. In fact, it could be that your child’s financial status is moderate or even poor. therefore they cannot be relied upon. Therefore, it is important for you to prepare. pension fund early
In fact, the practice of alms is highly recommended in all religions. Including Islam. However, Islam itself requires zakat as much as 2.5% of your total annual income. If the total annual income is 85 grams of gold, then in fact zakat fitrah is not necessarily paid by people with certain economic conditions.
Please wait 180 seconds or 3 minutes, the secret code will immediately appear under the countdown